There's a certain finesse to bidding on items on eBay, at least if you want to win. This chapter will help you get the jump on other bidders on eBay by learning when to bid, how much to bid, and what not to do when bidding.

After you’ve browsed through or searched the item listings and actually
found something you’re interested in, it’s time to pony up and make
a bid.

How does bidding work? In a nutshell, it’s as simple as telling eBay
how much you’d be willing to pay for an item—and then finding out
whether anyone else is willing to pay more than you. If you’ve made the
highest bid, you win the auction—and you have to buy the item.

It’s important to remember that it doesn’t cost you anything to
bid. You only have to pay if you win—and even then, you don’t have
to pay any fees to eBay. (All eBay fees are charged to the seller.) You’ll
have to pay the seller the amount of your winning bid, plus any necessary
shipping and handling costs to get the item to you.

Sounds easy enough, doesn’t it?

Understanding the Bidding Process

It’s important that you know all about the item you want to buy before
you place your bid. It’s also important that you know how eBay’s
bidding process works—or you could end up paying too much, or (even worse)
not enough to win the auction!

NOTE

Learn more about browsing and searching the item listings in Chapter 4,
"Searching for Items to Buy."

Deciding How Much to Bid

Determining how much to bid on an item on eBay is no more complex than
determining how much you’d pay for an item at a flea market or garage
sale. You should bid an amount no higher and no lower than what the item is
worth for you—and what you can afford. It doesn’t matter what the
current bid level is; you should make your bid in the amount of what
you’re willing to pay.

That doesn’t mean you’ll actually have to pay that amount, of
course. Thanks to eBay’s automated bidding software (discussed in the next
section, "Understanding Proxy Bidding"), registered bids will only be as
high as necessary to beat out the next-highest bidder. If you bid $40 but the
next highest bidder bid only $20, you’ll win the auction with a $20.50
bid.

TIP

If you remember nothing else from this book, remember this: Always enter the
highest amount that you’re willing to pay for an item, no matter what the
current bid level. If you think an item is worth $40, enter $40 as your maximum
bid—and don’t worry if the current bid is half that amount. You also
shouldn’t get upset if the bidding goes higher than your specified
maximum; have the discipline to bid only as high as you initially thought the
item was worth. If you’re bidding on a collectible, invest in an
up-to-date price guide (or reference one online). Whatever you’re bidding
on, search eBay for completed auctions on similar items, and determine a
reasonable price range. Make it a point to shop around, and make your bid
accordingly.

And you should make that $40 bid even if, at the time, the current bid is
only $1. Now, you might think that if the bidding is at the $1 level, you should
bid no more than $2 or so. This isn’t the case, again thanks to
eBay’s automated bidding software. If the item is worth $40 to you, bid
the $40—and let eBay’s proxy software handle the mechanics of the
bidding process.

How, then, do you determine that an item is worth $40—or $4 or $400?
The key thing is to never bid blind; always make sure you know the true value of
an item before you offer a bid.

This means that you need to do a little research before you make a bid. If
you’re bidding on a piece of new merchandise, check the price in a
catalog, at your local retailer, or with an online retailer.

Understanding Proxy Bidding

The automated bidding software used by eBay is called proxy (or
"robot") software. If you’re a bidder, eBay’s proxy software
can save you time and help ensure that you get the items you want. (If
you’re a seller, it doesn’t really matter, because all you’re
interested in is the highest price at the end of the auction—no matter how
it got there!)

On eBay, proxy software operates automatically as an agent that is
authorized to act in your place—but with some predefined bidding
parameters. You define the maximum amount you are willing to bid, and then the
proxy software takes over and does your bidding for you.

The proxy software bids as little as possible to outbid new competition, up
to the maximum bid you specified. If it needs to up your bid $1, it does. If it
needs to up your bid $5, it does—until it hits your bid ceiling, when it
stops and bows out of the bidding.

The proxy software bids in the official bid increments used by eBay. If the
next bid is $0.50 higher than the current bid, the software ups your bid $0.50.
In no instance does the software place a bid over the next bid
increment. (It’s pretty smart software!)

Of course, because all bidders are using eBay’s proxy software, what
happens when you have two users bidding against each other? Simple—you get
a proxy bidding war! In this instance, each proxy automatically ups its bid in
response to the last bid by the other proxy, which rapidly (seemingly
instantaneously) increases the bid price until one of the proxies reaches its
maximum bid level.

Let’s say one proxy has been programmed with a maximum bid of $25, and
another with a maximum bid of $26. Even though the initial bid might be $10, the
bids rapidly increase from $10 to $11 to $12 and on to $26, at which point the
first proxy drops out and the second proxy holds the high bid.

Bid Increments

To better understand proxy bidding, it helps to know eBay’s bid
increments. The bid increment is automatically calculated by eBay based on the
current price of the item—the higher the price, the higher the bid
increment, as shown in Table 3.1.

Table 3.1 eBay Bid Increments

Current Price

Bid Increment

$0.01–$0.99

$0.05

$1.00–$4.99

$0.25

$5.00–$24.99

$0.50

$25.00–$99.99

$1.00

$100.00–$249.99

$2.50

$250.00–$499.99

$5.00

$500.00–$999.99

$10.00

$1,000.00–$2,499.99

$25.00

$2,500.00–$4,999.99

$50.00

$5,000.00 and up

$100.00

Proxy Bidding, by Example

Let’s walk through a detailed example of proxy bidding. The process is
totally automated, and goes something like this:

You see an item that has a current bid of $100, and you tell eBay that
you’re willing to pay $115 for it. The $115 becomes your maximum
bid.

The bid increment on this item is $2.50, so eBay’s bidding
software—your proxy—bids $102.50 in your name. This becomes the
current high bid.

Another bidder sees this item, and bids the next bid increment (as
specified on the item listing page), $105.

Your proxy sees the new bid, and ups its bid automatically to
$107.50.

A third bidder sees the item, and enters a maximum bid of $150. In
accordance with the current bid increment, his proxy enters a bid of
110.

Your proxy responds with a bid of $112.50.

The third bidder’s proxy responds with a bid of $115.

Since the next bid increment would be $117.50—which is over your
maximum bid amount—your proxy drops out of the bidding, and eBay notifies
you (by email) that your bid has been surpassed. (If the auction were to end
right then, the third bidder would win the auction with a bid of $115. Even
though he specified a $150 maximum bid, the bidding never got that
high.)

At this point, you can place a new maximum bid for the item, or you can
throw in the towel and let the new bidder have the item.

Proxy Bidding Advice

The nice thing about proxy bidding is that you can engage in a fierce bidding
war—and never get your hands dirty! The proxy software does all the dirty
work for you, and just notifies you of the results.

When you’re placing your bid, realize that just because you set a
maximum bid price doesn’t mean you’ll have to actually pay that
price. The proxy software works in your favor to keep your final price as low as
possible; don’t assume that just because you specified a price, the
bidding will always rise to that level.

Also feel comfortable that the proxy software will never exceed your maximum
bid price. It just won’t happen; the software is smart enough to know your
limits. And by bidding your maximum right away, you guarantee that you
won’t get carried away and pay too much at the end of a heated
competition. Remember, if you lose an auction because the bidding goes higher
than your maximum, you didn’t want to pay that much for the merchandise
anyway. Get comfortable with that—and be glad the proxy software helped
you stay within your limits.

Of course, some bidders don’t like proxy bidding. It is true that if
two or more people are bidding for the same item, the bids can automatically
(and quickly) rocket up until they max out. For this reason, some bidders prefer
to bid the bare minimum on every single one of their bids—effectively
defeating the purpose of the proxy software. Of course, if you choose to operate
this way, you have to be a lot more hands-on with your bidding, essentially
checking back on all your bids as frequently as necessary to ensure that you
always end up on top.